Netflix said Thursday it wouldn’t raise its bid for Warner Bros. Discovery after WBD’s board earlier labeled a revamped offer from Paramount Skydance a “superior proposal.”
The announcement by Netflix paved the way for Paramount to merge with WBD, ending a months-long bidding war that captivated Hollywood and Washington.
WBD announced its decision on Thursday afternoon, potentially triggering a four-business-day window for Netflix to match the offer or lose the deal. But by the evening, the streaming giant opted to bow out, instead.
David Ellison’s Paramount Skydance has offered $31 per share in cash for WBD, plus a 25-cent quarterly “ticking fee” per share for any delays after Sept. 30.
The offer also includes a $7 billion regulatory breakup fee and covers the $2.8 billion penalty Warner Bros. Discovery would owe Netflix if it bolts.
“We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty, and speed to closing,” Ellison said in a statement issued before Netflix bowed out.
A takeover target can label an external bid as a “company superior proposal” that’s financially stronger and more viable if it has been vetted by independent advisors.
Netflix’s offer for Warner Bros. Discovery was an all-cash transaction valued at $27.75 per share.
It came after officials on both sides of the Atlantic warned that Netflix could face the ire of anti-trust authorities, prompting CEO Ted Sarandos to lobby Washington and major European capitals that the proposed deal should get the green light.
Perks offered by Paramount include Ellison’s dad — Oracle founder Larry Ellison, a close ally of President Trump’s — pledging extra equity for lender solvency.
Warner Bros. Discovery, which is led by CEO David Zaslav, said it still views Netflix as its preferred buyer for now.
“The Netflix merger agreement remains in effect, and the Board continues to recommend in favor of the Netflix transaction and has not withdrawn or modified its recommendation,” the company said in a statement before the streamer said it wouldn’t raise its offer.
It is thought that any new company that emerges from the bidding war, which would include HBO Max, would rival tech giants Amazon and Apple in the increasingly competitive streaming market.
